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Condensed provisional results of the audited consolidated annual financial statements for the year ended 28 February
AFRICAN DAWN CAPITAL LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/020520/06)
JSE code: ADW
ISIN: ZAE000223194
("the Company" or "the Group" or "Afdawn")
Condensed provisional results of the audited consolidated annual financial statements for the year ended 28 February 2019
The financial year has been impacted by the following key events
- Final payment to SARS was made in February 2019 to settle the long outstanding SARS debt of the Group. The Group has repaid R8.238
million to SARS since December 2017.
- The Specific Issue of 26,8 million shares to Arvesco 153 Proprietary Limited (Arvesco) at 35c per share in December 2018 ("the Arvesco Transaction")
to settle obligations and to recapitalise Elite Group (Elite). The Arvesco Transaction further derisked the Group and made it possible
to access capital markets in the future. Arvesco, through its networks, will give the Group access to funding and new revenue opportunities.
- Elite was negatively affected due to limited new funding while repaying ZARclear. This led to a decline in advances and revenues.
Elite continued to reduce cash operating costs. Elite has excess capacity for growth, but needs funding to leverage it's lending
platform. The ZARclear debt will be repaid in full by March 2020.
Results of continued operations
Revenue was down by R4,1 million to R13,3 million due to lack of growth funding
Operating expenses decreased by R9.4 million to R21,7 million after taking in consideration the following
- Salary and Directors Emoluments cost decreased by R1,310 million
- Rental Cost decreased by R0,282 million
- Management and consulting fees decreased by R0,879 million
- Audit Fees increased by R0,608 million
- Depreciation and amortisation decreased by R0.539 million
- Legal fees decreased by R0.579 million
- Circular costs were R0,574 million
- Other cost decreased by R1.592 million
- Finance Cost was up by R0,392 million
The one-off SARS Settlement Gain of R11,8 million in the previous period was not repeated and the net result was an increase in Loss from continuing operations
of R8.096 million to R9,393 million in this period.
The Group Liabilities decreased by R4.574 million during the period to R12.049 million as a result of SARS Debt repayment and repayment of loans by Elite Group.
The Group Net Asset Value decreased by R1,38 million to R6,62 million.
Statement of Financial Position as at 28 February 2019
Notes 2019 2018
R'000 R'000
Assets
Non-Current Assets
Property, plant and equipment 343 400
Intangible assets 2 554 921
Deferred tax - 26
897 1,347
Current Assets
Trade and other receivables 3 15,387 22,851
Cash and cash equivalents 2,388 429
17,775 23,280
Total Assets 18,672 24,627
Equity and Liabilities
Equity
Share capital and share premium 6 323,323 313,943
Accumulated loss (316,700) (305,825)
Non-controlling interest - (114)
6,623 8,004
Liabilities
Non-Current Liabilities
Borrowings 7 431 4,031
431 4,031
Current Liabilities
Current tax payable 5 - 5,705
Borrowings 7 6,774 4,259
Loans from directors 8 2,820 685
Operating lease liability 2 62
Trade and other payables 9 2,022 1,881
11,618 12,592
Total Liabilities 12,049 16,623
Total Equity and Liabilities 18,672 24,627
Statement of Profit or Loss and Other Comprehensive Income
2019 2018
Notes R'000 R'000
Operations
Revenue 10 13,335 17,409
Other income 638 1,599
Investment income 4 27
Loss on sale of subsidiary 4 (181) -
Gain on SARS settlement - 11,809
Finance costs (1,505) (1,114)
Other operating expenses (21,674) (31,031)
Operating loss before taxation (9,383) (1,301)
Taxation (10) 4
Loss from continuing operations (9,393) (1,297)
Loss from discontinued operations - (1,364)
Total comprehensive (loss) for the year (9,393) (2,661)
Loss attributable to:
Owners of the parent: (9,393) (2,614)
Non-controlling interest in share of loss - (47)
Loss per share from operations 16 (33.5) (12.1)
Basic and diluted loss per share (c) - continued operations (33.5) (5.9)
Basic and diluted loss per share (c) - discontinued operations - (6.2)
Statement of Changes in Equity
Total Non-
Share Share Share Accumulated controlling Total
Capital Premium Capital loss Interest equity
Group R'000 R'000 R'000 R'000 R'000 R'000
Balance at 01 March 2017 8,803 305,140 313,943 (303,630) - 10,313
Change in holding 419 (67) 352
Total comprehensive loss for the year - - - (2,614) (47) (2,661)
Balance at 28 February 2018 8,803 305,140 313,943 (305,825) (114) 8,004
Share Issue 10,720 (1,340) 9,380 - - 9,380
IFRS 9 adjustment related to prior year - - - (1,130) - (1,130)
Reversal of change in holding (refer to note 4) - - - (352) 114 (238)
Total comprehensive loss for the year - - - (9,393) - (9,393)
Balance at 28 February 2019 19,523 303,800 323,323 (316,700) - 6,623
Statement of Cash flows
2019 2018
Notes R'000 R'000
Cash flows from operating activities
Cash generated (used in)/by operations 11 (1,560) 6,837
Interest income - continued 4 27
Interest income - discontinued - 5
Finance costs - excluding SARS interest on income tax - continued (1,505) (1,114)
Finance costs - excluding SARS interest on income tax - discontinued - (169)
Tax (paid) 12 (5,662) (3,010)
Net cash from operating activities (8,723) 2,576
Cash flows from investing activities
Purchase of property, plant and equipment - continued (2) (17)
Purchase of intangible assets - continued 2 (40) (344)
Sale of subsidiary - cash effect 4 (4) -
Sale of subsidiary - discontinued - 3,570
Proceeds from sale of equity controlled instrument 1,000
Net cash from investing activities (46) 4,209
Cash flows from financing activities
Share Issue 6 9,380
Borrowings repaid - continued 11 (4,628) (1,337)
Borrowings repaid - discontinued 11 - (6,164)
Borrowings raised 3,841 -
Directors loans repaid (967) (838)
Directors' loans raised 11 3,102 -
Net cash from financing activities 10,728 (8,339)
Total cash movement for the year 1,959 (1,554)
Cash at the beginning of the year 429 1,983
Total cash at end of the year 2,388 429
Basis of preparation
These condensed provisional results from the consolidated financial statements contain the information required by IAS 34: Interim Financial
Reporting, and have been prepared in accordance with the framework concepts and the measurement and recognition requirements of International
Financial Reporting Standards ("IFRS"), the Financial Pronouncements as issued by the Financial Reporting Standards Council, the Companies
Act, No. 71 of 2008, and the JSE Listings Requirements.
The accounting policies and methods of computation applied in the preparation of these condensed provisional results are in terms of IFRS.
These provisional condensed results of the consolidated financial statements were compiled by Dylan Kohler, Professional Accountant (SA),
under supervision from the financial Director, Graham Hope CA(SA).
This summarised report is extracted from audited information, but is not itself audited. The directors take full responsibility for the
preparation of the summarised results and that the financial information has been correctly extracted from the underlying annual
financial statements.
The consolidated annual financial statements, from which the summarised results have been derived, were audited in accordance with
International Standards on Auditing by the group's external auditors, Mazars, who expressed an unqualified audit opinion which includes
a material uncertainty relating to going concern. This is available for inspection at the company's registered office. That report does
not necessarily cover all the information contained in this announcement.
Shareholders are therefore advised that, in order to obtain a full understanding of the nature of the auditors' work, they should refer
to the report together with the annual consolidated financial statements. A copy of the full consolidated annual financial statements
is available for inspection from the company secretary at the registered office of the group.
The accounting policies and methods of computation applied in the preparation of these summarised consolidated annual financial results
are in terms of IFRS and consistant with the prior year except for the changes in accounting policies due to the impact of the new
standards that became effective during the current reporting period as set out below:
The accounting policies used are consistent with those of the previous annual financial statements, except for the below adoptions.
Changes in accounting policies and basis of preparation
The following standards have been adopted during the current year
- IFRS 9 Financial Instruments
The directors reviewed and assessed the company's existing financial assets as at 01 March 2018 based on the facts and circumstances that
existed at that date and concluded that the initial application of IFRS 9 has had the following impact on the company's financial assets
as regards to their classification and measurement:
Impairment of financial assets
In relation to the impairment of financial assets, IFRS 9 requires an expected credit loss model as opposed to an incurred credit loss
model under IAS 39. The expected credit loss model requires the company to account for expected credit losses and changes in those
expected credit losses at each reporting date to reflect changes in credit risk since initial recognition of the financial assets.
In other words, it is no longer necessary for a credit event to have occurred before credit losses are recognised.
Specifically, IFRS 9 requires the company to recognise a loss allowance for expected credit losses on debt investments subsequently
measured at amortised cost or at fair value through other comprehensive income to which the impairment requirements of IFRS 9 apply.
In particular, IFRS 9 requires the company to measure the loss allowance for a financial instrument at an amount equal to the lifetime
expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition, or if
the financial instrument is a purchased or originated credit-impaired financial asset. On the other hand, if the credit risk on a
financial instrument has not increased significantly since initial recognition (except for a purchased or originated credit-impaired
financial asset), the company is required to measure the loss allowance for that financial instrument at an amount equal to 12 months
expected credit losses. IFRS 9 also provides a simplified approach for measuring the loss allowance at an amount equal to lifetime
expected credit losses for trade receivables, contract assets and lease receivables in certain circumstances.
As at 01 March 2018, the directors reviewed and assessed the company's existing financial assets, amounts due from customers and
financial guarantee contracts for impairment using reasonable and supportable information that was available without undue cost or effort
in accordance with the requirements of IFRS 9 to determine the credit risk of the respective items at the date they were initially
recognised, and compared that to the credit risk as at 01 March 2017 and 01 March 2018.The result of the assessment is as follows:
The additional loss allowance is charged against the respective asset or provision for financial guarantee, except for the investments at
fair value through other comprehensive income, the loss allowance which is recognised against the reserve in equity. The application
of the IFRS 9 impairment requirements has resulted in additional loss allowance of R0 to be recognised in the current year
(2018: R 1,130,430).
Classification and measurement of financial liabilities
The application of IFRS 9 has had no impact on the classification and measurement of the company's financial
liabilities.
Reconciliation of the reclassifications and remeasurements of financial assets as a result of adopting IFRS9
The following table presents a summary of the financial assets as at 01 March 2018.
Group
Cumulative
additional
loss
allowance
Items existing on 1 March 2018 recognised
that are subject to the related to
impairment provisions of IFRS 9 Note Credit risk attributes 2018 R,000
Trade and other receivables 3 The company applied the general approach 1,130,430
and recognises lifetime expected credit
losses for these assets due to the short
term nature of these assets.
Cash and cash equivalents All bank balances are assessed to have low -
credit risk at each reporting date as they are
held with reputable international banking
institutions.
Total additional loss allowance 1,130,403
- IFRS 15 Revenue from Contracts with Customers
In the current year, the company has applied IFRS 15 Revenue from Contracts with Customers (as revised in April 2016) and the related
consequential amendments to other IFRSs. IFRS 15 replaces IAS 11 Construction Contracts, IAS 18 Revenue, IFRIC 13 Customer Loyalty
Programmes, IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 18 Transfers of Assets from Customers and SIC-31 Revenue -
Barter Transactions Involving Advertising Services.
IFRS 15 introduces a 5-step approach to revenue recognition. Far more prescriptive guidance has been added in IFRS 15 to deal with
specific scenarios. Details of these new requirements as well as their impact on the company financial statements are described below.
Refer to the revenue accounting policy for additional details.
The company has applied IFRS 15 with an initial date of application of 01 March 2018 in accordance with the cumulative effect method, by
recognising the cumulative effect of initially applying IFRS 15 as an adjustment to the opening balance of equity at 01 March 2018. The
comparative information has therefore not been restated.
As the current policies comply with the IFRS15 standards there is no financial impact but the disclosure has been amended in compliance
with IFRS15.
Material uncertainties related to going concern
'Without qualifying their opinion, the auditors would like to draw attention to Note 1, Going concern judgement, in this SENS announcement
which indicates the existence of material uncertainties which may cast significant doubt on the group's ability to continue as a going
concern.'
These provisional condensed consolidated financial statements were compiled by Dylan Kohler, Professional Accountant (SA), under supervision
from the financial Director, Graham Hope CA(SA).
Approval by the Board
The provisional condensed consolidated financial statements for the year ended 28 February 2019 (including comparatives)were approved and
authorised for issue by the board of directors on 31 May 2019.
Notes to the financial statements
1. Going concern judgement
The consolidated and separate financial statements have been prepared on the basis of accounting policies applicable to a going concern. This
basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities,
contingent obligations and commitments will occur in the ordinary course of business.
The material uncertainties relating to events or conditions which may cast doubt upon the ability to continue as a going concern are
outlined below:
This judgement is based on a careful consideration of the following:
* Financial statements should be prepared on a going concern basis unless it is intended to liquidate the entity or to cease trading or
there is no realistic alternative but to do so.
* In considering whether the going concern assumption is appropriate, all available information is taken into account, including
information about the foreseeable future.
* Where there are material uncertainties relating to events or conditions which may cast doubt upon the ability to continue as a going
concern, those uncertainties should be disclosed.
* The material uncertainties relating to events or conditions which may cast doubt upon the ability to continue as a going concern are
outlined in the table below. The table also outlines the actions being taken to manage these uncertainties and also the current status
of these uncertainties and actions.
Uncertainty Action Status
Operating losses incurred by Additional funding to be During the current year, there was
the Group over the last two years. obtained in the group. a specific share placement and
R9.3 million was raised.
Some of these funds were used to
settle the SARS liability
as well as recapitalise Elite
with R5 million. The directors
are currently also sourcing additional
funding. With the R5 million already invested
and potential additional funding Elite will
be able to grow and generate profit going forward.
Afdawn's ability to pay ongoing Directors and various parties The directors have waived
operational expenses. have provided and continue to their right of claim to
provide funding for other unpaid salaries for this
ongoing operational expenses. period and the holding
Management are investigating company of Arvesco has
other opportunities for provided a letter of
revenue growth. comfort to cover ongoing
expenses while additional
funding is sought. Elite Group
is positioning itself to do point
of sales lending and management are
evaluating the opportunity to establish
a commercial finance business line
in PTF2.
Having regard to the nature of the uncertainties, the actions being taken and also the current status of these uncertainties, the
judgment of the management and board is that it is appropriate that the financial statements be prepared on the going concern basis.
2. Intangible assets
2019 2018
R'000 R'000
Accumulated Accumulated
amortisation amortisation
and Carrying and Carrying
Cost impairment amount Cost impairment amount
Micro finance software 1,026 (573) 453 987 (515) 472
YueDiligence software
development 332 (231) 101 328 (121) 207
SME Snapshot software
development - - - 242 - 242
Total 1,358 (804) 554 1,557 (636) 921
* Intangibles with a cost Rnil (2018: R1,249 million) that were fully amortised were scrapped for nil consideration.
Reconciliation of intangible assets - Group - 2019
Business
Opening combinations Closing
balance note 4 Additions Amortisation Disposal balance
Micro finance software 472 - 40 (59) - 453
YueDiligence software development 207 - - (106) - 101
SME Snapshot software development 242 (242) - - - -
921 (242) 40 (165) - 554
Reconciliation of intangible assets - Group - 2018
Business
Opening combinations Closing
balance note 4 Additions Amortisation Disposal balance
Micro finance software 767 - 206 (501) - 472
SME Snapshot software development - 104 138 - - 242
Contractual customer contracts on
acquisition of Knife Capital Group 2,689 - - (683) (2,006) -
YueDiligence 319 - - (112) - 207
3,775 104 344 (1,296) (2,006) 921
3. Trade and other receivables
2019 2018
R'000 R'000
Trade receivables 26,452 30,291
Impairment allowance (11,667) (9,440)
Deposits 236 286
VAT 39 10
Phezula (A) - 418
Thinkroom (B) - 946
Other receivables 327 340
15,387 22,851
(A) Phezula the previous owners of SME Snapshot were given a cash loan to assist with further development of the software in SME Snapshot.
(B) Thinkroom the purchaser of associate Grindstone Accelerator Proprietary Limited settled the outstanding balance during the current financial year.
4. Business Combination/disposal
In July 2017 the Group acquired 100% of the equity and claims in SME Snapshot through the issue of shares in subsidiary YueDiligence. 18 new
shares with a par value of R1 each were issued to Phezulu Group Close Corporation which is 15% of the equity control of YueDiligence to
acquire control of the company. The subsidiary was then returned to Phezula on 1 March 2018 and the 18 shares in YueDiligence were returned.
The acquisition is summarized below:
Acquisition of SME Snapshot Proprietary Limited
2018
R'000
Intangible assets software developed at fair value 104
Liabilities to owner at fair value (352)
Net liability disposed/acquired (248)
Reverse reversal of minority interest in SME Snapshot -
Outside shareholders share of liability 15% of SME 37
Snapshot NAV
Goodwill on acquisition 211
Less equity accounted consideration see below -
Loss on sale of subsidiary - non-cash effect -
The goodwill was recognised because of synergies that arose from including SME Snapshot into the Group.
Disposal of SME Snapshot Proprietary Limited
On 1 March 2018, the group disposed of its investment in SME Snapshot in return for the 18 shares in YueDiligence.
2019
R'000
Intangible assets software developed at fair value 242
Cash and cash equivalents 4
Trade and other receivables including (A) Phezula note 9 471
Trade and other payables (298)
Net liability disposed/acquired 419
Reverse reversal of minority interest in SME Snapshot 114
Less equity accounted consideration see below (352)
Loss on sale of subsidiary 181
The effect on equity can be reconciled as follows:
2019 2018
R'000 R'000
Consideration at fair value (352) 352
15% of Net Asset Value of YueDiligence at acquisition - 30
given up
Outside shareholders share of liability 15% of SME - 37
Snapshot NAV
(352) 419
5. Tax payable
2019 2018
R'000 R'000
Current tax payable - (5,705)
- (5,705)
A settlement agreement was reached with SARS in December 2017 the terms of which are summarized below:
* Various penalties and interest on Income Tax and Vat were reversed in Afdawn and several subsidiaries with outstanding balances.
Accruals raised for interest and penalties were reversed as follows: Group Income Tax of Rnil (2018: R7,757 million and VAT of R4,052 million).
* Afdawn and subsidiaries that were part of the settlement with assessed losses accumulated to 2017 would be forfeited.
* The full balance outstanding to SARS in terms of the settlement agreement has now been paid.
6. Share and share premium
Authorised
2019 shares 2018 shares
R R
125,000,000 Ordinary shares of 40c each 50,000,000 50,000,000
The total shares in issue as at 28 February 2019 amounted to 48,725,057 (2018: 21,925,057).
2019 2018
Reconciliation of number of shares in issue R'000 R'000
Reported as at 01 March 21,925 21,925
Share issue 7 December 2018# 26,800 -
Closing balance 48,725 21,925
Reconciliation of share values 'R000:
Reported at beginning of period 313,943 313,943
Share issue 7 December 2018# 9,380 -
Reported at the end of the period
323,323 313,943
Total share premium 303,800 305,140
Ordinary shares @ 1c # 19,523 8,803
323,323 313,943
# Shareholders approved the Specific Issue of 26 800 00 Shares for cash at a General Meeting held on 26 November 2018.
The additional shares were issued and listed on the JSE on 7th December 2018. The shares were issued to Arvesco, at
the Issue Price of 35 cents per Share.
7. Borrowings
Loan
Balance
2019
GROUP R'000
Toothrock 850
The loan bears interest at prime, is secured on ceded debtors and is repayable over 6 months.
MC Theunissen 50
The loan bears interest at prime, is secured on ceded debtors and is repayable over 6 months.
JP Verwey 180
The loan bears interest at prime, is secured on ceded debtors and is repayable over 3 months.
JC Breedt 550
The loan bears interest at prime, is secured on ceded debtors and is repayable over 3 months.
ZARclear loan (A) 698
Interest is charged at prime +1%, currently 11.25%. Capital repayments of R698,00
will be made during the 2020 financial year amounting to and average of R162,500
per month. Interest is paid together with the monthly capital repayments as they
fall due. The loan is unsecured.
ZARclear Interest loan (C) 3,333
Interest is charged at prime +1%, currently 11.25%. Capital repayments will
commence once the ZARclear Loan (A) has been settled. Capital repayments of
R2,902,000 will be during the 2020 financial year for and average of R242,000 per
month with R431,000 being repayable during the 2021 financial year. Interest is
accrued and paid on a monthly basis. The loan is unsecured.
GC Oosthuizen - The loan bears interest at prime, is secured on ceded debtors and is repayable over 6 months. 250
M Springer - The loan bears interest at prime, is secured on ceded debtors and is repayable over 6 months. 300
CPA Peyper - The loan bears interest at prime, is secured on ceded debtors and is repayable over 6 months. 100
AS Van der Westhuizen - The loan bears interest at prime, is secured on ceded debtors and is repayable over 6 months. 80
A Stoop - The loan bears interest at prime, is secured on ceded debtors and is repayable over 6 months. 25
C Stoop - The loan bears interest at prime, is secured on ceded debtors and is repayable over 6 months. 310
B Mitchell - The loan bears interest at prime, is secured on ceded debtors and is repayable over 6 months. 15
JC Breedt - The loan bears interest at prime, is secured on ceded debtors and is repayable over 6 months. 55
Makalu Capital Proprietary Limited - The loan bears interest at 15%, is unsecured and is repayable on a ad-hoc basis 397
Shockproof Investments Proprietary Limited- The loan bears interest at 15%, is unsecured and is repayable on a ad-hoc basis 12
7,205
Loan Balance
2018
GROUP R'000
HT Malan 100
The loan bears interest at prime, is secured on ceded debtors and is repayable over 6 months.
ME Malan 100
The loan bears interest at prime, is secured on ceded debtors and is repayable over 6 months.
JP Verwey 180
The loan bears interest at prime, is secured on ceded debtors and is repayable over 3 months.
National Housing Finance Corporation ("NHFCE") - 128
The facility is secured by the associated debtors, bears interest at prime + 5% and
is repayable over 5 years from the borrowing date. African Dawn Capital Limited has
provided a guarantee on the loan facility. Elite has drawn down less than the
ZARclear loan (A) 2,648
Interest is charged at prime +1%, currently 11.25%. Capital repayments of
R1,950,000 will be made during the 2019 financial year amounting to and average of
R162,500 per month with R698,000 being repayable during the 2020 financial year.
Interest is paid together with the monthly capital repayments as they fall due. The
loan is unsecured.
ZARclear Interest loan (C) 3,333
Interest is charged at prime +1%, currently 11.25%. Capital repayments will
commence once the ZARclear Loan (A) has been settled during the 2020
financial year. Capital repayments of R2,902,000 will be made during the 2020
financial year amounting to an average of R242,000 per month with R431,000 being
repayable during the 2021 financial year. Interest is accrued and paid on a monthly
basis. The loan is unsecured.
GC Oosthuizen - The loan bears interest at prime, is secured on ceded debtors and is repayable over 6 months. 387
M Springer - The loan bears interest at prime, is secured on ceded debtors and is repayable over 6 months. 150
CPA Peyper - The loan bears interest at prime, is secured on ceded debtors and is repayable over 6 months. 100
DJC Beukes - The loan bears interest at prime, is secured on ceded debtors and is repayable over 6 months. 200
JC Breedt - The loan bears interest at prime, is secured on ceded debtors and is repayable over 6 months. 350
C Lacante - The loan bears interest at prime, is secured on ceded debtors and is repayable over 6 months. 30
C Stoop - The loan bears interest at prime, is secured on ceded debtors and is repayable over 6 months. 185
Makalu Capital - The loan bears interest at prime, is unsecured and is repayable over 6 months. 306
T Nel - The Loan bears interest of 10,5% per annum and is unsecured. 93
8,290
Non-current liabilities Group
2019 2018
R'000 R'000
At amortised cost 431 4,031
431 4,031
Current Liabilities
At amortised cost 6,774 4,259
6,774 4,259
8. Loans from directors
2019 2018
R'000 R'000
WJ Groenewald ** # 428 100
G Hope ** # 2,392 585
2,820 685
Non-current liabilities - -
Current liabilities (2,820) (685)
(2,820) (685)
** All loans accrue interest at 15% per annum, are unsecured and are repaid on an adhoc basis in the short term.
# Refer to note 15 for details of the option agreements that were entered into after the year end.
9. Trade payables
2019 2018
R'000 R'000
Trade payables 707 645
VAT 160 176
Accrued leave pay 933 916
Accrued expenses 222 144
2,022 1,881
10. Revenue
Group Group
2019 2018
R'000 R'000
Commissions received ^ 185 549
Administration fee 3,058 3,866
Rendering of service 310 306
Interest received ^ 9,785 12,721
Discount allowed (3) (33)
13,335 17,409
Below is the disaggregated revenue per segment:
Investment
advisory and
investment
2019 Group R'000 management Micro finance Head Office Total
Commissions received
- Insurance commission - 101 - 101
- Other commission - 84 - 84
Administration fees - 3,058 - 3,058
Rendering of other
services 144 166 - 310
Interest received - 9,785 - 9,785
Discount allowed (3) - (3)
144 13,191 - 13,335
Investment
advisory and Rentals of
investment properties in
2018 Group R'000 management Micro finance possession Head Office Total
Commissions received ^
- Insurance
commission - 304 - - 304
- Other commission - 222 - 23 245
Administration fees - 3,866 - - 3,866
Rendering of other
services 172 134 - - 306
Interest received ^ 12,721 - - 12,721
Discount allowed - (33) - - (33)
172 17,214 - 23 17,409
11. Cash used in Operations
2019 2018
R'000 R'000
Loss before taxation continued and discontinued operations (9,383) (2,846)
Adjustments for:
Depreciation - continued 59 157
Depreciation -discontinued - 21
Loss on disposal of property in possession/ property, plant and
equipment - discontinued - 22
Investment income - continued (4) (27)
Investment income - discontinued - (5)
Finance costs - continued 1,505 1114
Finance costs - discontinued - 169
Loss on sale of Knife Capital - 426
Profit on sale of associate - (209)
Loss on sale of subsidiary - refer to note 4 181 -
Non-cash Impairment goodwill - continued - 211
Non-cash Impairment goodwill - discontinued - 485
Non-cash finance costs (penalties and interest on income tax and vat) - continued - (11,809)
Non-cash amortisation- continued 165 610
Non-cash amortisation - discontinued - 684
Non-cash deemed interest expense - continued (152) (433)
Non-cash operating lease movement - continued (60) 58
Non-cash impairment of debtors loss allowance 1,249 8,645
Non-cash settlement of debtors 1,157 -
Changes in working capital:
Properties in possession - discontinued - 15,831
Trade and other receivables IFRS 9 prior year adjustment 1,130 -
Trade and other receivables 2,452 568
Trade and other payables 141 (6835)
(1,560) 6,837
Cashflow from financing activities
Borrowings Borrowings Directors
2019 Group R'000 non-current current loans Total
Opening balance 4,031 4,259 685 8,975
Cash movements
Borrowings repaid - (4,628) (967) (5,595)
Advances on existing - 3,841 3,102 6,943
Advances new current - - - -
Total cash movements - (787) 2,135 1,348
Non-cash movements - (298) (298)
Transfer of borrowings to current (3,600) 3,600 - -
Closing balance 431 6,774 2,820 10,025
Borrowings Borrowings Directors
2018 Group R'000 non-current current loans Total
Opening balance 6,316 9,475 1,523 17,314
Cash movements
Borrowings repaid (207) (2,951) (1,523) (4,681)
Borrowings repaid discontinued - (6,164) - (6,164)
Advances on existing - 1,801 685 2,486
Advances new current - 20 - 20
Total cash movements (207) (7,294) (838) (8,339)
Non-cash movements
Transfer of borrowings to current (2,078) 2,078 - -
Closing balance 4,031 4,259 685 8,975
12. Tax paid
Balance at beginning of the year (5,705) (16,280)
Current tax for the year recognised in profit or loss - (181)
Balance at beginning of year Deferred Tax - -
Current tax recognized for prior year profit or loss (10) 4
Adjustment in respect of penalties and interest raised 53 (15)
SARS liability settlement reduction reversal penalties and - 7,757
Balance at end of the year - 5,705
(5,662) (3,010)
13. Segment Report
The segment information has been prepared in accordance with IFRS 8 - Operating Segments which defines the requirements for the
disclosure of financial information of an entity's operating segments. IFRS 8 requires segmentation based on the Group's internal
organisation and reporting of revenue and operating income based upon internal accounting methods.
The Group discloses its operating segments according to the components regularly reviewed by the chief operating decision-makers, being
the executive directors. These amounts have been reconciled to the consolidated financial statements. The measures reported by the Group
are in accordance with the accounting policies adopted for preparing and presenting the consolidated financial statements. Segment
revenue excludes value added taxation and includes inter-segment revenue which is Rnil (2018: 0,192). Net revenue represents segment
revenue from which intersegment revenue has been eliminated. Sales between segments are made on a commercial basis. Segment operating
profit before capital items represents segment revenue less segment expenses. Segment expenses consist of operating expenses.
Depreciation, amortisation and impairments have been allocated to the segments to which they relate.
The segment assets comprise all assets of the different segments that are employed by the segment and that are either directly attributable
to the segment, or can be allocated to the segment on a reasonable basis.
The Group's reportable segments are based on the following lines of business:
a. Investment advisory and investment management
This segment consists of the YueDiligence. YueDiligence provides investment advisory and investment management services to entrepreneurial and
innovative companies. Knife Capital and Grindstone were sold during 2018, so transactions related to these entities are treated as discontinued
operations in the prior year.
b. Micro finance
This segment consists of Elite and Elite Two. These companies are involved in micro finance in the unsecured lending industry and have a wide base of customers (mostly individuals).
c. Rentals of properties in possession
This segment consisted of a property that was sold in 2018 and treated as a discontinued operation.
d. Head office
Head office consists of the head office expenses in the holding company together with other entities that previously operated in the bridging
finance and vehicles finance industry. The entities have become dormant and the collection of outstanding balances is managed by head office.
All the segments operate only in South Africa, largely in the Gauteng and Western Cape provinces therefore no geographical information is provided.
Similarly, all non-current assets are in South Africa.
Investment
advisory
and
investment Micro
management finance Head office Total
2019 Group R'000 R'000 R'000 R'000
Revenue 144 13,191 - 13,335
Other income - 257 381 638
Investment income - 3 1 4
Finance costs - 1,020 485 1,505
Operating expenses 279 17,303 4,092 21,674
Impairment trade and other receivables - 1,249 - 1,249
Bad debts actually written off 3 1,115 39 1,157
Loss on disposal of subsidiary - - (181) (181)
Depreciation and amortisation 106 97 21 224
(Loss) before taxation (135) (4,872) (4,376) (9,383)
Taxation (27) - 17 (10)
Total comprehensive loss (162) (4,872) (4,359) (9,393)
Segment total assets 104 15,095 3,473 18,672
Segment total liabilities 5 8,247 3,797 12,049
Intangible assets acquired - 40 - 40
Property, plant and equipment acquired - 2 - 2
Investment
advisory Rentals of
and properties
investment Micro in
management finance possession Head office Total
2018 Group R'000 R'000 R'000 R'000 R'000
Revenue # 172 17,214 - 23 17,409
Other income - 373 - 1,226 1,599
Investment income 19 8 - 1 28
Finance costs 5 1,138 - (29) 1,114
Operating expenses 634 20,718 - 9,679 31,031
Impairment trade and other receivables - (7,718) - (3,596) (11,314)
Bad debts actually written off - 12,249 - 7,710 19,959
Gain on SARS settlement - - - 11,809 11,809
Depreciation and amortisation 109 622 - 38 769
Profit/(loss) before taxation (449) (4,228) - 3,376 (1,301)
Taxation - (4) - - (4)
Discontinued operations (787) - (577) - (1,364)
Total comprehensive (1,236) (4,224) (577) 3,376 (2,661)
Segment total assets 977 17,804 53 5,793 24,627
Segment total liabilities 329 9,641 46 6,607 16,623
Intangible assets acquired 241 206 - - 447
Goodwill acquired 211 - - - 211
Property, plant and equipment acquired - 17 - - 17
# Revenue of (R33,000) of has been reclassified from Other to Micro finance as it related to discount allowed that should have been allocated to
Micro finance segment refer to note 10. The cost of sales and deemed interest were also reclassified as operating expenses refer to note 14.
14. Reclassification
Change of statement of profit and loss from function to nature
The statement of profit and loss and other comprehensive income has been reclassified from the functional
basis to the nature basis to improve readability of the statements.
Deemed interest
Deemed interest income/(expense) has been reclassified into operating expenses as the amount relates to the
impairment loss allowance in trade and other receivables.
The effect of the above changes are indicated below:
Statement of profit and loss and other comprehensive income
Group 2018 R'000 As previously stated Adjustment Now stated
Cost of sales (116) 116 -
Gross profit 17,293 (17,293) -
Deemed interest 433 (433) -
Operating expenses (31,348) 317 (31,031)
Operating loss (12,456) 12,456 -
15. Events after reporting period
Directors Put Option Agreement
On 31 May the Group has entered into various put option agreements with the directors and Makalu Capital
("the Grantors") whereby the Group has the option to sell certain claims ("Option Claims") to the Grantors
before a period of 120 days. Should the Group decide to sell the Option Claims to the Grantors the amount
payable ("the Option Consideration") would be proportionately offset against loans provided by the directors
(the Director Loans)(refer note 8) and Makalu Capital ("the Makalu Loan"). Should part of the Option Claims
be collected before the Option Close Date the Option Consideration will be reduced by the amount collected.
The transactions would be categorised once the Group decide to exercise the options and the required
approvals would be obtained. The loans subject to the option had the following values as at 28 February 2019:
G Hope R2,391,503, WJ Groenewald R428,000 and Makalu Capital R397,000.
16. Loss per share
Basic loss per share
Basic loss per share are calculated by dividing the loss attributable to equity holders of the company by the
weighted average number of ordinary shares in issue during the year.
Basic and diluted loss per share
2019 2018
c c
From continued operations (c per share) (33.5) (5.9)
Total loss per share from discontinued operations (c per share) - (6.2)
(33.5) (12.1)
Reconciliation of loss for the year to basic loss
Loss from continued operations (9,393) (1,297)
Loss from discontinued operations - (1,364)
Basic loss total (9,393) (2,661)
Reconciliation of weighted average number of ordinary shares used for basic loss per share and
headline and diluted headline loss per share
2019 2018
'000 '000
Number of ordinary shares in issue opening 21,925 21,925
Ordinary share is on 7 December 2018 6,094 -
Weighted average number of shares used for loss and headline
loss per share 28,019 21,925
Headline loss per share
2019 2018
c c
Headline loss per share continued operations (c) (32.8) (5.0)
Headline loss per share discontinued operations (c) - (2.9)
Total Headline loss per share (32.8) (7.9)
Total Headline loss per share from continued operations 2019 R'000 Gross Tax Net
Loss from continued operations (9,383) (10) (9,393)
Loss on Sale of Snap shot 181 - 181
Headline loss from operations (9,202) (10) (9,212)
Headline loss continued operations 2018 R'000
Gross Tax Net
Loss from continued operations (1,301) 4 (1,297)
Impairment of goodwill 211 - 211
Headline loss from operations (1,090) 4 (1,086)
Headline loss discontinued operations 2018 R'000 Gross Tax Net
Loss from discontinued operations (1,545) 181 (1,364)
Loss on sale of Knife Capital 426 - 426
Profit on sale of associate (209) - (209)
Impairment of goodwill 485 - 485
Loss on disposal of property, plant and equipment 22 - 22
Headline loss from discontinued operations (821) 181 (640)
17. Administration
The directors in office at the date of this report are as follows:
Directors Office Designation
J Slabbert Chairperson # Non-executive
WJ Groenewald Chief Executive Officer (CEO)* Executive
G Hope Chief Financial Officer (CFO) Executive
V Lessing Chairman remunerations committee Independent non-executive
HH Hickey Chair audit committee Independent non-executive
SM Roper Independent non-executive
# J Slabbert was appoint Chairperson on 6th December 2018
* The CEO acted as Chairperson until 6 December 2018 at which point J Slabbert was appointed Chairperson.
Company secretary
A Rich(on behalf of Statucor Proprietary Limited)
Registered office
3RD Floor, The Village at Horizon,
Corner of Sonop and Ontdekkers Roads,
Horizon View,
1724,
Gauteng
Transfer secretaries
Computershare Investor Services Proprietary Limited
70 Marshall Street,
Johannesburg
2001
Designated Advisor
PSG Capital
Tel: +27 (12) 914 5566
3 June 2019
Date: 03/06/2019 09:40:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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